Academic journal article Journal of Accountancy

Accountant Is Not Liable for Emotional Distress

Academic journal article Journal of Accountancy

Accountant Is Not Liable for Emotional Distress

Article excerpt

The Supreme judicial Court of Maine ruled that an accountant cannot be held liable for damages for emotional distress sustained as a result of an alleged breach of contract.

James and Virginia McAfee bought a small store in Maine and hired Douglass Wright as their accountant. In 1988, the Internal Revenue Service informed the McAfees that they were delinquent in filing their tax forms and paying their taxes for 1987. The McAfees discontinued their relationship with the CPA in June 1990 because they believed he was responsible for the delinquency and requested that he return their files. He refused until his former clients began a court action against him in district court in July 1991. The McAfees alleged breach of contract and sought damages for both the breach and for emotional distress.

The CPA counterclaimed for unpaid fees. The lower court ruled he was liable to the McAfees for interest and penalties associated with their late filings and for Virginia McAfees emotional distress from her tax problems. (James McAfee had died.

The CPA appealed this ruling in the superior court, which reviewed the evidence concerning the alleged late filings. Contrary to the district court finding, the superior court concluded the evidence showed the McAfees received the W-2 forms from their CPA around January 1989. …

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